October 11, 2010

Over three years into this, and we’ve lost many of our local banks: Shoreline Bank, Evergreen Bank, Frontier Bank, Citibank (of Lynnwood) — all taken over by the FDIC.

Still alive? Seattle Bank is fighting a lawsuit in California that threatens its imminent recapitalization. I like these guys, and I’m hoping they prevail. Homestreet Bank, the once proud family-owned Continental Savings, which used to be one of my favorites, is on my prayer list — as in the hit song, “I’ll pray for you.” I hear no good news out of those quarters and from my personal accounts, see their approach to workouts on their bad debts to be fully counterproductive. First Financial Northwest, fka Renton Savings, has had its stock pounded to as low as $3.50/share – but they’ll make it. Sterling Savings Bank, which is one of the largest regional banks (behind Washington Federal), closed on a $700mm recapitalization and is out of the woods. They get five stars for their handing of our accounts and development projects during this crisis. Hope the recap can propel them into bigger and better things.

It’s getting to be a bad habit seeing the Friday afternoon updates coming through from the FDIC on my Android. Hope we see the day — and soon — when those announcements cease altogether.

A: An LLC, or Limited Liability Company, is controlled by one or more managers. Typically the manager will be granted the authority to convey real property by the “LLC Operating Agreement.” It is a good idea to get a copy of this Agreement early on in the course of a transaction and to get it to the Title Company well in advance of closing so they can verify there are no issues with the Manager’s authority. I get a copy of the Operating Agreement when I take the listing agreement with the seller so that we avoid any hangups on down the line.

October 2, 2010

Great community bank that just couldn’t get through this period to better times. They were an excellent supporter for lots of non-profits in Shoreline and Lake Forest Park, and the board and investors were all local folk. Really too bad…and the acquiring bank? Out of SoCal — never heard of them. Will be interesting to see what happens here with the branches and employees. http://www.fdic.gov/bank/individual/failed/shoreline.html

September 13, 2010

For eighty years this was the family home. Grandma and Grandpa settled here in the 30’s; Mom was born here; holidays were spent in the dining room and on the front porch. Lots of memories in This Old House. Now Grandma has passed away…what to do?

Sometimes this is a purely emotional decision; when this happened in my family, my father chose to keep the house for a few years — nearly 10 — until the pain of letting go of his mother’s long time home had grown less severe. Since that happened just before the boom-boom aughts, it worked out okay (he sold in 2006, pre-bubble).

Other times, there’s a desire to keep the home in the family for someone to use — a grandchild, or perhaps the children of the grandparent.

I had a call the other day from a college friend, who long ago had left his small California hometown in his tracks to pursue his fortune elsewhere. After a stint in Law School, and some time working in a high level position in Washington, he was ensconced in high paying consulting gig. When Grandma passed away and his mother made it known that she’d like to live in the family home, he offered to buy it from the estate — for cash. After all, it wasn’t a big amount of money to him and it would allow mom to stay in the home. No investment motivation — just wants to do something nice for mom.

However, I look down the road a bit. If he buys the house for today’s value — $85,000 — and in 20 years, somehow it’s worth $200,000 — there could be resentment when his mom’s estate has nothing to pass onto my friend and his two siblings. He’ll own the house and get 100% of its then considerable value (deservedly; he’s laying out the cash now).

I suggested an alternative: Instead of buying the place, use the cash to fund the purchase for his mom; act as her bank. Have her pay whatever nominal amount of interest the IRS requires to avoid gift taxes (3%?). So for $250/month she gets to own the house; he gets to enable that. And if she wants to sell it at any point, or if she leaves it to her estate, there’s no issues about him getting too much of a benefit for the bargain — since he has no profit motivation here anyway, it’s not the bargain that he wants. In addition, he relieves himself from having any of the burdens of ownership (liability, maintenance, tax payments, etc). He just gets to grant his mom’s wish to keep the house in the family.

March 31, 2010

Only a month left for First Time Homebuyers (and repeat homebuyers) to get into contract to purchase — and to able to claim their $8,000 federal tax credit. That deadline for “contract date” is 4/30/2010. Buyers will then have until June 30, 2010, to close on these purchases…so those considering being stuck in a short sale quagmire…consider carefully!

Why no mention of what culpability the son, who took the $500,000 in loan proceeds and didn’t make her payments for her, has in the loss of her home? Without that initial refinance, none of the subsequent refi’s would have been even necessary. He’s like the prodigal son — got his inheritance early. The only thing is, the prodigal’s dad had lots of cattle left over and this poor woman is living in a little apartment now.

September 9, 2009

I spend part of the day yesterday at Real Estate Bar Camp, held at Seattle’s Lake Union Armory (very cool building which I’d never been in on the South Lake Union waterfront — Soon to be the new Museum of History and Industry).

One of the sessions I sat in was hosted by Stan Humphries of Zillow – he presented on the data that is available on Zillow, and the “State of Seattle’s real estate market” — at least as it can be evaluated from behind a computer screen. Zillow has lots of data behind its site, most of it culled from County Assessor’s public records. It allows a user — for FREE — to sort the data in a variety of ways — by area, and by a number of different criteria. From the Zillow home page, click on the LOCAL INFO tab at the top.

One of the criteria I hadn’t seen before is as shown below in this graph — the percentage of homes sold at a gross gain in sales price, compared with the prior sale. The figure has been steadily dropping since early 2008, but still — 87% of homes that sold last month (or last quarter, I can’t quite tell) sold for more than their prior sale. That doesn’t mean a profit was made — the homeowner may have remodeled or otherwise upgraded the home, and of course, there’s the costs to sell that are typically around 8% of gross sales price — but still I think it’s interesting. Not EVERYONE is losing money…in fact, it appears in Seattle, that 86.4% of the sellers are still making some…

As predicted, inventory is SHRINKING! Lots of sales and lots of pendings in this property category. Supply in north Seattle is down to about four months, which most folks say is a “heathly balance.” Caveat — the “Active” numbers may not include sites where the builder has one or two units out of four or six available. But those sales of unlisted units won’t show up in my stats, which I pulled from our NWMLS database.

Has to make the construction lenders — Sterling Savings, Citybank, Evergreen Bank, and their ilk — very pleased.

I think May and June closed sales will even higher, until inventory is totally gone. And you know what happens when supply goes down and demand stays constant…